Intel’s CHIPS Act funding cut by over $600 million

The White House is reducing Intel’s CHIPS Act award by over $600 million. Initially set to receive $8.5 billion from the domestic silicon production bill, the company will get up to $7.85 billion instead. On Tuesday, The New York Times reported that Intel has extended some plant openings beyond 2030 government deadlines. However, the Commerce Department said the funding reduction was instead due to a $3 billion military contract Intel was awarded.

Intel posted its biggest-ever quarterly loss last month after announcing 15,000 layoffs in August. The chip-maker’s struggles have reportedly led some government officials to worry about its ability to deliver as a central component of the Biden White House’s CHIPS Act.

Intel will receive at least $1 billion in CHIPS Act funding before the end of the year. The company plans to invest $90 billion in the US by the decade’s end, a reduction from its initial goal of $100 billion in the next five years. The Commerce Department said the chip maker is still on schedule to invest the full $100 billion on projects in four states: Arizona ($3.94 billion), Oregon ($1.86 billion), Ohio ($1.5 billion) and New Mexico ($500 million).

One of the outgoing President’s landmark bills, the CHIPS Act is projected to create over 125,000 jobs across 20 states while spurring US silicon manufacturing and decreasing reliance on foreign manufacturers. Intel is the largest recipient of CHIPS Act money.

The Commerce Department has reportedly moved quickly to finalize awards with the bill’s recipients before the second Trump term begins in January. The President-elect attacked the legislation and its cost during his campaign, and House Speaker Mike Johnson said at the time Republicans “probably will” try to repeal the CHIPS Act. However, Johnson later walked back his remarks, and analysts predicted after the election that the legislation would likely survive.

Earlier this month, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading advanced chip maker, was the first to have its grants finalized. It will receive $6.6 billion (including at least $1 billion before the end of the year) for three plants in Arizona, which are expected to create “tens of thousands of jobs by the end of the decade.”

US Secretary of Commerce Gina Raimondo has reportedly urged tech companies — including Apple, Amazon, NVIDIA, AMD and others — to work with Intel because the 56-year-old company is the only US-based logic chip maker. However, most companies were said to have rejected her pleas because “Intel’s chip-making techniques are not as sophisticated” as TSMC’s, according to a NYT report last month.

Although Taiwan is an ally and economic partner of the US, the Biden administration reportedly views reliance on it as “increasingly risky” as China poses a continual threat to take over the self-governing island. Last month, China held military “drills” in the sea and sky surrounding Taiwan as a warning after the island’s president, Lai Ching-te, reasserted the island’s independence in a holiday speech. The US State Department said it was “seriously concerned” about the show of force.